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Thread: Building boom or builders' doom?

  1. #1
    hiyo all

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    Default Building boom or builders' doom?

    Developers can't have it both ways. No demand complain, high demand also complain. Tolong lah.....give us a break and stop whining!

    Jun 14, 2011, ST

    Building boom or builders' doom?

    Ramping up for sharp rise now could leave spare capacity later

    By Esther Teo PROPERTY REPORTER

    -- ST PHOTO: ALPHONSUS CHERN


    THE building boom is looking less cheery for contractors who face soaring material costs, labour shortages and squeezed margins, as ever-increasing numbers of firms compete for a share of the spoils.
    There is also a fear in the industry that the sudden sharp rise in demand could fall just as suddenly, leaving firms saddled with more staff and other resources than they need.
    Builders are already constructing private homes with more to come, given the bumper supply of state land that has been released. But now they have a new source of additional demand to contend with, in the form of a huge ramp-up in Housing Board projects.
    The National Development Ministry announced last month that an additional 3,000 Build-to-Order (BTO) flats will be launched this year, bringing the total to a record 25,000 units this year.
    Compare that with 2009, when only about 9,000 BTO flats were launched, while there were 16,100 last year.
    A Kim Eng report estimates these additional BTO units this year will be worth about $380 million in construction revenue.
    National Development Minister Khaw Boon Wan also committed to keeping up the pace next year, implying that an unprecedented 50,000 HDB flats could be launched in just two years.
    At first glance, this spells a golden era for developers, with a wealth of new contracts in the offing.
    But concerns are surfacing among industry players that this demand spike, together with a tight labour supply and limited resources, could send costs soaring.
    Factor in the larger pool of developers - many came here for the integrated resorts contracts and have stayed on - and you have a recipe for tighter margins.
    Mr Pek Lian Guan, executive director and chief executive of property and construction group Tiong Seng Holdings, noted that tender prices have 'dived' this year due to competitive bidding.
    Yet at the same time, raw materials costs have shot up and foreign worker levies have increased.
    Mr Pek cautioned that ramping up BTO flat construction to clear the backlog of demand will also increase costs, but if construction demand drops in two years, the industry might be hit.
    'For us in construction, we prefer a more steady market because if you increase your demand suddenly, the industry has to respond by building its capacity,' he said.
    'When a contractor builds his capacity, of course, it's more costly, so prices will go up. If two years later you shrink your programme after they've built their capacity, then what are they going to do?'
    EL Development managing director Lim Yew Soon said building costs have risen by at least 10 per cent from a year ago, but many firms have absorbed the higher charges in a bid to secure contracts in a more competitive landscape.
    'Especially with this push for productivity, we need to invest more in machinery as well. Yet we're not sure if construction demand might be as strong down the road, so this is a concern for all builders,' added Mr Lim.
    Singapore Contractors Association president Ho Nyok Yong noted that while some of the cost increases can be passed on to developers of new projects, builders will have to bear the pain with projects secured earlier.
    When there are plenty of contracts up for grabs, firms employ more people and invest in new technologies, but if the industry then slows suddenly, it will be a 'big problem', he added.
    'There's always a risk in expanding the construction business too quickly, and we've constantly reminded our members to do so in a more careful manner with proper planning.
    'A gradual growth of the industry is best for contractors so we can continue to retain skilled workers, engineers and professionals in the industry. We don't want a roller-coaster scenario, which will make the industry unsustainable.'
    A Building and Construction Authority spokesman said the HDB ramp-up of supply is likely to have some impact on overall construction demand in the next three years.
    But the most significant impact will be felt more in the public housing segment itself, with short-term pressures on the pool of regular contractors bidding for HDB jobs.
    It said the HDB will seek to expand the pool of contractors tendering for its projects.
    hungry eat sleepy sleep

  2. #2
    Junior

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    they have right to complain ma.
    Hard to plan if spikes up and down. What every business owners want is steadily increasing business with small dips.

  3. #3
    Newbie

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    Default too many too fast not good

    it's a good problem to have.

  4. #4
    hiyo all

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    Quote Originally Posted by dingding
    it's a good problem to have.
    ya..happy whining
    hungry eat sleepy sleep

  5. #5
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    This would only spell further price escalation for projects to be launched in 2012 and 2013..

    Mr Pek said tender prices for land parcels have dived this year. Is he joking? What did he mean by diving? Maybe overall statistics? I'm doubtful!

  6. #6
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    Quote Originally Posted by ysyap
    This would only spell further price escalation for projects to be launched in 2012 and 2013..

    Mr Pek said tender prices for land parcels have dived this year. Is he joking? What did he mean by diving? Maybe overall statistics? I'm doubtful!
    Yah.. Recently hedges park construction bid came out to be 350psf surprised me.. I guess from now, breakeven price for developer have to be calculated differently liao. Cannot happily just add 250-300psf to land bid..

  7. #7
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    They could be digging their own graves.... as they ramp up production and fixed costs, wonder whether history will again repeat itself when construction demand slows down

  8. #8
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    Delayed TOP and some contractor companies went bust and a lot of problems then! Will it happen again? Will developers absorb those extra cost till they go bust also?

  9. #9
    Senior

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    Default anyone can help to calculate psf cost of construction?

    The Board of Directors of Lian Beng Group Ltd ("the Company", and together with its
    subsidiaries, the “Group”) wishes to announce that its wholly-owned subsidiary, Deenn
    Engineering Pte Ltd has secured a main building works contract from FCL Peak Pte. Ltd. for
    proposed condominium development comprising 4 blocks of 15-storey residential flats with 2
    basement car park, swimming pools and ancillary facilities at Bedok Reservoir Road known as
    “Waterfront Isle” (the “Contract”).
    The Contract is worth S$128.8 million. The contract period shall be 40 months and is expected to
    commence in July 2011.
    The Contract is not expected to have a financial impact on the net tangible assets per share and
    earning per share of the Group for the financial year ending 31 May 2011.
    None of the Directors and controlling shareholders has any interest, direct or indirect, in the
    Contract.

  10. #10
    Senior

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    Default another one for H2O Residences

    The Board of Directors of United Fiber System Limited (the "Company") is pleased to announce that Poh Lian Construction (Pte.) Ltd ("PLC"), a wholly owned subsidiary of the Company has been awarded a building contract from Impac Holdings Pte Ltd, a member of the City Development Limited Group, for the construction of condominium comprising of 5 blocks (19, 21, 22, 23-storey) residential flats (total 521 units) with 2 basement carparks, swimming pool and communal facilities at Sengkang West Ave / Fernvale Link.
    The total contract sum of the project is S$166,820,493.00 and the construction period is 156 weeks commencing from 1 August 2011.

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